This episode's headline: News Summary; Budget Impasse; Iran: Arms Ring; War on Drugs: High on the Job; Libya: Moral Questions?. The guests include In Washington: JAMES MILLER, Office of Management and Budget; Sen. PETE DOMENICI, Republican, New Mexico; Chairman, Budget Committee; Dr. ROBERT DUPONT, Drug Testing Expert; GENE GUERRERO, Civil Liberties Union; In New York: RUDOLPH GIULIANI, U.S. Attorney; Reports from NewsHour Correspondents: JUNE MASSELL, in San Francisco. Byline: In New York: JUDY WOODRUFF, Correspondent; In Washington: JIM LEHRER, Associate Editor